UPDATE 2-U.S. House Democrats slam Valeant's drug price hikes; shares sink

Mon Sep 28, 2015 4:54pm EDT
 
Email This Article |
Share This Article
  • Facebook
  • LinkedIn
  • Twitter
| Print This Article | Single Page
[-] Text [+]

(New throughout, adds analyst comments, Hillary Clinton drug proposals, background)

By Ransdell Pierson and Bill Berkrot

Sept 28 (Reuters) - Democratic lawmakers on Monday attacked "massive" price increases of two heart drugs from Canada's Valeant Pharmaceuticals International Inc, fueling a rout in drugmaker shares on worries of a government and insurer clampdown on U.S. drug prices.

All 18 Democratic members of the House Committee on Oversight and Government Reform urged their chairman to subpoena Valeant and force it to provide documents relating to price increases of 212 percent for Isuprel and 525 percent for Nitropress. Valeant boosted the prices immediately after buying the heart drugs in February.

Shares of Valeant tumbled 16.5 percent and other pharmaceutical company shares slid too. Investors have worried that the drug industry faces a moment of reckoning for steep price hikes for new and older medicines. Shares of many pharmaceutical companies have slumped since 2016 Democratic presidential hopeful Hillary Clinton last week proposed ways for the government to prevent "profiteering" by the industry.

The tumble in Valeant shares on Monday hit hedge funds run by activist investors Bill Ackman, John Paulson and Jeffrey Ubben.

Ackman's fund, Pershing Square Capital Management, owns nearly 5.76 percent of Valeant, which partnered with Ackman last year in a failed bid to acquire Botox-maker Allergan Plc .

The Nasdaq Biotech Index sank 6 percent, while the ARCA Pharmaceuticals Index of large drugmakers dropped 3.5 percent. AbbVie Inc, Eli Lilly & Co and Gilead Sciences Inc were among the hardest hit.

The Democratic House members also urged panel Chairman Jason Chaffetz, a Republican, to invite Valeant Chief Executive Michael Pearson to testify at a hearing next week. That would put him in the same hot seat as Martin Shkreli, chief executive officer of privately held Turing Pharmaceuticals, who had already been called to testify.   Continued...